Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Yuanta Securities
- Investment Rating: Buy
- Target Price: 630,000 KRW (~$458.58 USD based on 1380 KRW/USD) – Upgraded from 530,000 KRW
- Core Thesis: While memory price growth may slow, the overall upcycle is expected to extend through 2027-2028 due to HBM’s erosion of general DRAM capacity and rising demand for high-capacity memory driven by AI inference.
Investment Thesis and Target Price
Yuanta Securities has raised its Investment Rating to Buy and increased the Target Price to 630,000 KRW (~$458.58 USD based on 1380 KRW/USD) from the previous 530,000 KRW. The valuation is based on the 2027 estimated Book Value Per Share (BPS) multiplied by a Target PBR of 3.5x.
The analyst argues that market concerns regarding a 2028 “peak-out” are premature. The supply constraint is likely to persist longer than expected because HBM production consumes significant general DRAM capacity, and the expansion of AI inference is driving demand for higher-capacity memory. Furthermore, a prolonged memory upcycle is expected to structurally increase Free Cash Flow (FCF), potentially leading to more shareholder-friendly policies between 2027 and 2029.
Earnings Estimates and Financial Preview
For 3Q26, the consolidated estimated Operating Profit is 99.86 trillion KRW (~$72.36B USD based on 1380 KRW/USD) with Revenue of 212.19 trillion KRW (~$153.76B USD). This represents a significant Year-over-Year (YoY) increase, though it is slightly below market consensus.
Divisional Breakdown (3Q26 Estimates):
- DS (Device Solutions): Estimated Operating Profit of 100.0 trillion KRW (~$72.46B USD) with an Operating Profit Margin (OPM) of 67.4%. This is a massive YoY increase (+1538.5%) and a 14.5% QoQ increase. Within DS, Memory is estimated at 102.0 trillion KRW (~$73.91B USD) while Non-Memory is estimated at -2.0 trillion KRW (~$1.45B USD).
- SDC (Samsung Display): Estimated Operating Profit of 1.1 trillion KRW (~$797.1M USD), reflecting a 9.6% YoY decline but a 54.9% QoQ increase. Profitability was impacted by depreciation costs (~0.3 trillion KRW) from 8.6-generation IT OLED mass production and pricing pressure from North American customers.
- DX (Device Experience): Estimated Operating Loss of 1.1 trillion KRW (~$797.1M USD), turning to a loss YoY due to rising IT component costs. MX is estimated at -0.9 trillion KRW and VD/DA at -0.2 trillion KRW.
Key Semiconductor Drivers and Catalysts
- HBM4 Momentum: The full-scale sales of High Bandwidth Memory (HBM) 4 are expected to be a primary driver. The analyst estimates quarterly average price increases of +18.0% for DRAM and +16.0% for NAND Flash.
- Foundry Recovery: While the Non-Memory division remains in deficit, the loss is narrowing significantly when excluding provisions for special performance bonuses, supported by improved utilization rates in advanced nodes.
- Market Cycle: The transition to AI inference is shifting demand toward high-capacity memory, ensuring a tight supply-demand balance through 2027-2028.
🔗 Original Source: View the official filing/article here.